How to Avoid Committing Mortgage Fraud When Your Jacksonville Florida Home Is Going Into Foreclosure.
You’ve just received the letter you have been dreading and hoping would never come, the notice of Lis Pendens, which announces to the world that you’re behind on your mortgage payments and the bank has begun the foreclosure process on your Jacksonville home.
Not long after your notice, your mailbox seems to be a popular place for all the mail your getting from all the “nice” people wanting to help you and your family. Some of those people are investors, real estate agents, attorneys, or companies who say they can negotiate a loan modification or a short sale on your behalf.
Some of these companies and people are good people who are honest and will do the right thing. Some are only wanting to take advantage of your situation and want your property to make a ginormous profit, dishonestly.
Here’s one scenario you need to avoid so you don’t commit mortgage fraud: The investor who wants you to sign over your deed to them, without them paying off your loan first. This means you don’t own your house but you’re still responsible for your mortgage. You sign over your deed and the investor lists the property for sale, sometimes with a real estate agent. (Sometimes the investor doesn’t take over the deed, so they may not always ask for you to sign over the deed) Let’s say they list the house for 150k (with you owing more than 150k, making this a short sale) and get a buyer willing to pay that price. The investor submits a contract to your mortgage company for 100k, with them being the buyer. Your mortgage company has no idea about the other buyer with the 150k offer. The bank accepts the 100k offer and eventually 2 closings take place, the first with the investor as the buyer, then the 150k buyer. Guess what this is called? Mortgage fraud! You, the investor and the real estate agent have all committed mortgage fraud together. Even if you and the real estate agent are unaware, you could both be held responsible, along with the investor.
Why is it mortgage fraud? In a nutshell,since this is a short sale, the house was listed for a higher price, got a buyer at the higher price, but the investor’s contract was for alot lower. The 150k buyer is never disclosed to the lender. Most of the time, the buyer isn’t even aware of the offer the investor is making with the lower amount. The investor has pretty much stolen money, due to the lender.
How do you avoid this situation?
1. NEVER sign your deed over to anyone, unless it’s at the closing table because you have completed a successful and honest short sale (if your short) or a closing if you’re not in a short sale situation.
2. If the investor tells you NOT to talk to your lender, then that’s a red flag!
3. If they tell you that they will act as a trustee to your property, don’t buy it.
4. If a real estate agent approaches you with any of those situations, saying that is good to do, kick them to the curb!
I’ve seen these scenarios in our local MLS and the FBI has made visits to the Jacksonville, Orange Park Florida areas, investigating this type of mortgage fraud.
I won’t get involved with those situations and as my client, I would never ask you to get involved either. I always use a reputable and honest closing attorney, if you don’t already have an established relationship with one. During the short sale process, I handle all the details for you, but at any time, you can call and talk to your mortgage company to discuss the process with them. I will never sway you to not be in communications with your bank or to get an attorney if you choose.
I currently service short sales in Jacksonville, Fleming Island, Orange Park and the surrounding Northeast Florida Area. Call me at 904-910-3516 to discuss your situation and find the best solution to help you avoid foreclosure.